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European banks need 'deep-rooted reforms,' IMF says

European banks need to carry out "deep-rootedreforms" to reduce the risks to financial stability, the IMF said Oct. 7.

The fund's most recent GlobalFinancial Stability Report, published Oct. 5, argued that lenders shouldfocus on reducing their stock of nonperforming loans, which has balloonedduring the financial crisis.

"In addition, reforms that speed up asset recovery ininsolvency and otherwise reduce the risk of investing in bad loans couldpotentially boost the price that third-party investors would be willing to payfor them by about 20% on average, according to standard distressed investorpricing models," the IMF said.